ITR-2 Form Filing

The ITR-2 Form is an important Income Tax Return form used by Indian citizens, as well as Non Residents to file their Tax Returns with the Income Tax Department of India. Individuals who are not eligible to use ITR-1 can use the ITR-2 Form.

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Who is eligible to file ITR 2 for AY 2018-19?

ITR Form 2 is for Individuals and HUF receiving income other than income from “Profits and Gains from Business or Profession”. Thus Persons having income from following sources are eligible to file Form ITR 2 :

Income from Salary/Pension

Income from House Property(Income Can be from more than one house property)

Income from Capital Gains/loss on sale of investments/property (Both Short Term and Long Term)

Income from Other Sources (including winning from Lottery, bets on Race Horses and other legal means of gambling)

Foreign Assets/Foreign Income

Agricultural Income more than Rs5000

Resident not ordinarily resident and a Non resident

Who cannot file ITR 2 for AY 2018-19?

Any individual or HUF having income from Business or Profession

Individuals who are eligible to fill out the ITR-1 Form

What is the Structure of ITR 2?

ITR-2 is divided into:

Part A: General Information

Part B-TI: Computation of Total Income

Part B-TTI: Computation of tax liability on total income

Details to be filled if the return has been prepared by a Tax Return Preparer

Schedule S: Details of income from salaries

Schedule HP: Details of income from House Property

Schedule CG:. Computation of income under Capital gains.

Schedule OS: Computation of income under Income from other sources.

Schedule CYLA: Statement of income after set off of current year’s losses

Schedule BFLA: Statement of income after set off of unabsorbed loss brought forward from earlier years.

Schedule CFL: Statement of losses to be carried forward to future years.

ITR-2 must be filed by individuals and HUFs who are not eligible to file ITR-1 Sahaj form, because of following reasons:

Income exceeding Rs. 50 Lakhs

Having foreign assets / income

Having agricultural income which is more than Rs. 5,000

Having taxable capital gains

Having income from business or profession as a partner

Having more than one house property

ITR-2 form should not be filed by any individual who has income under the head of Business or Profession from a proprietorship. ITR-2 form can also not be filed by a company or LLP or other types of legal entity.

ITR-2 form is to be used when the assessee has income that falls into the below category:

Accrued income through the sale of assets or property (Capital Gains)

Income from more than one housing property

Income from countries outside of India

Income as a partner in any firm (not proprietorship)

Income from agriculture above Rs 5,000

Income from any windfall such as lotteries or horse racing

Income from Salary/Pension, Housing Property, Other sources that exceeds Rs. 50 Lakhs

ITR-2 form must be filed by individuals and HUFs on or before 31st July of every year.

How to file ITR 2?

You can submit your ITR-2 Form either online or offline.

Offline:

Only following persons can file their ITR offline :

Individual who are of the age 80 years or more.

Individual whose income is less than Rs 5 lakhs per year and who do not have to claim refund in the return.

Return can be filed offline by :

By furnishing a return in a physical paper form

By furnishing a bar-coded return

The Income Tax Department will issue you an acknowledgment at the time of submission of your physical paper return.

Online/Electronically:

By furnishing the return electronically under digital signature

By transmitting the data electronically and then submitting the verification of the return in Return Form ITR-V

If you submit your ITR-2 Form electronically under digital signature, the acknowledgment will be sent to your registered email id. You can also choose to download it manually from the income tax website. You are then required to sign it and send it to the Income Tax Department’s CPC office in Bangalore within 120 days of e-filing.

Remember that ITR-2 is an annexure-less form i.e. you do not have to attach any documents when you send it.
Major changes introduced in ITR 2 for AY 2018-19

Given that ITR-1 is not applicable for the RNORs and the non-residents, they have to necessarily go with ITR-2 for filing their return of income

The applicability of ITR-2 has been made more clear in as much as now it is applicable for individuals and HUF having income other than income under the head “Profits and Gains from Business or Profession”

The field of “Profits and Gains from Business or Profession” which was earlier featuring under Part B – TI has now been removed.

Following this, Schedule-IF (Income from Firm) and Schedule-BP have also been removed. This now means, anyone earning income from a partnership firm, now has to file ITR-3 and not ITR -2

Additionally, under Schedule AL, the field pertaining to “Interest held in the assets of a firm or association of persons (AOP) as a partner or member thereof” has been done away with

This means, a partner in a firm who could file his return in ITR 2 until AY 2017-18(specifically made available in ITR -2 for AY 2017-18) has to now file his return in ITR 3 for AY 2018-19

Similar to ITR -1, even in ITR-2, under the Schedule on TDS, there is also an additional field for furnishing details of TDS as per Form 26QC for TDS made on rent. Also, provision for quoting of PAN of Tenant For such rent cases has also been made.

What are the codes which prescribe special rates of tax, to be filled in Schedule SI?

Nature of Income

Section

Rate of Tax

Section Code

Tax on accumulated balance of recognised provident fund

111

To be computed in accordance with rule 9(1) of Part A of fourth Schedule

1

Short Term Capital Gains

111A

15

1A

Long term capital gains (with indexing)

112

20

21

Long term capital gains (without indexing)

112

10

22

Dividends, interest and income from units purchase in foreign currency

115A(1)(a)

20

5A1a

Income from royalty or technical services where agreement entered between 31.3.1961 to 31.3.1976 in case of royalty and between 29.2.1964 and 31.3.1976, and agreement is approved by the Central Government.

Paragraph EII of Part I of first schedule of Finance Act

50

FA

Income from royalty & technical services

115A(1)(b) if agreement is entered on or before 31.5.1997

20

5A1b1

Income from royalty & technical services

115A(1)(b) if agreement is entered on or after 31.5.1997 but before 1.6.2005

20

5A1b2

Income from royalty & technical services

115A(1)(b)if agreement is on or after 1.6.2005

10

5A1b3

Income received in respect of units purchase in foreign currency by a off-shore fund

115AB(1)(a)

10

5AB1a

Income by way of long-term capital gains arising from the transfer of units purchase in foreign currency by a off-shore fund

115AB(1)(b)

10

5AB1b

Income from bonds or GDR purchases in foreign currency or capital gains arising from their transfer in case of a non-resident

115AC(1)

10

5AC

Income from GDR purchased in foreign currency or capital gains arising from their transfer in case of a resident

115ACA(1)

10

5ACA

Profits and gains of life insurance business

115B

12.5

5B

Winnings from lotteries, crosswords puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature whatsoever

115BB

30

5BB

Tax on non-residents sportsmen or sports associations

115BBA

10

5BBA

Tax on income from units of an open – ended equity oriented fund of the Unit Trust of India or of Mutual Funds